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in the primary research. The researcher personal interpretation of secondary data on the key expansion strategies of apparel retailers were discussed during the interview and these interpretations have helped to design the content of the questionnaires. These two interviews were carried out with two different companies of two different countries. Both the retail companies are providing two different form of clothing to the consumer. In the terms of brand image, one company ‘Allen Solly’ is well established and expanding their outlets from last decade on the other hand second company ‘Head & Griffiths’ is planning to expand now want to create a brand image of their bespoke clothing brand. Data Analysis for Interview 1 The interview was held with the Regional Manager of the Allen Solly Brand. Allen Solly is the brand of Madura garments apparel retailer and is a subsidiary of Aditya Birla Group. As the respondent is working in India, so the interview was taken over telephone. A copy of detailed transcript of interview has been attached in Appendix A. The table below will give the identification of the company which has been analysed through interview. Name of the Apparel Brand Allen Solly Name of the Company Madura Garments Business of the Company Apparel Retailing and Thread manufactur ing Revenue of FS201011 £237.16 mn Number of Location Employee of Head s office 3700 Bengalor e, India Website Address
www.alle nsolly.co m
The Allen Solly is a very old brand of clothing retailing it is founded by William Hollin and Co Ltd. In 1993 Madura Garments a subsidiary company Of Aditya Birla group has bought this Brand and launched in India. This company is among the one of the most successful apparel retailing companies in India. This company has bought the concept of Friday dressing for men and vibrant colour format for formal dressing range in the Indian apparel market. As said above the main purpose of this interview is to know the current expansion plan of the company and to obtain a better understanding general idea of current expansion plans of apparel retailers. The issues that were discussed in the interview are divided into segments. 1. Current Expansion Strategy 2. Effect of Recession on expansion plans 3. Future expansion plans 4. Forecast of Future expansion methods in the market
1. Current Expansion of the Strategy Allen Solly provides fashion clothing for men, women and kids however their main product line was formal clothing for men. This company is expanded progressively in last 3 years by increasing its turnover 24% every year (Allensolly.com). Allen Solly is using the internet technologies from a long time though it has increased its online present in last three years. For 15 years company has been expanding through opening their own stores at different location in the metro cities in the country however nowadays the company has changed their expansion plan with the change in the market trends and industry economic conditions. Now the company is using
franchising as a main tool for their physical expansion of business. Company has abandon their plans for opening their own stores and making their physical opening by the stores run and manage by franchisee. Allen Solly has also started expansion by the means of internet and m- commerce; they are selling their products through online retailing. They are generating a major part of their revenue by sales through franchise stores. “Our 80% of the sales and revenues are generated through the franchise store. 15% revenues are generated through online sales and rest 5% revenues are generated through sales of company own stores.” (Interview 1, 2011)
The third strategy of Allen solly for the expansion and growth of the business is product diversification. Company is diversifying their product range regularly and adding a new clothing trend every year in their product range. Allen Solly started their operations in India with product range of Men formal clothing with vibrant colours, now they have added Uncrushable clothing, holiday clothing, and clothing for women and kids in their product range. However they consider that the diversification helps them in the expansion although the main aim and benefit of diversification is to get the differential advantage and beat the competitors in the market. Diversification is primarily use to stay ahead of competitors (Interview 1, 2011).
2. Effect of Recession on expansion plans Economic crisis in 2008 has affected the market, industries and economies. Every market has face downfall in the business and
apparel retail industry is also affected badly by recession. Recession also has affected the Allen Solly. The company has seen a huge decrease in sales and revenue in their annual reports after the recession. This crisis has forced Allen Solly to change their expansion plans according to market conditions, their financing situations and market trends. Before the recession company was using a big amount of investment in the expansion and growth however after the recession they have cut down their budget for expansion. Business expansion and growth team is forced to create new plans for their expansion in the very limited budget. “We have seen a huge downturn and due to which we now develop our plans for the expansion by keeping our budgets low” (Interview 1, 2011). This low investment and low risk attitude of the company has resulted into the franchising strategy for their physical expansion in the market. According to the respondent even big retailers are also affected by recession and some retailers even have shut down their operations in market due to continuous losses.
Franchising will increase the sales and customer service standard of the company. “It will increase the sales and customer experience as every franchisee will try to increase their sales and customer experience by putting more efforts in sales and customer relationship as they get royalty and profit in return” (Interview 1, 2011). The
adoption of franchising has helped the company to manage a good cash flow and have more risk in the market as compare to conditions of company own stores. Allen solly also need to bear less expenses
for overheads and needs less resources as they do not need to manage store by themselves. 3. Future expansion plans Allen solly is a continuously growing and expanding brand since its launch in India. Company always keeps working on its business expansion plans. Now the company is working on their new expansion method. They are planning to launch one new channel of retailing in the non store retailing format by the means of catalogue distribution also known as mail delivery. “Our team is currently working on catalogue retailing a new channel of retailing and hope that we are first to do so in India” (Interview 1, 2011). Now the market is recovering from the post effect of recession and showing the signs of growth. According to the respondent, company is thinking that it is the good time to expand and they are planning to launch their non store retailing format in first quarter of next year 2012. If they successfully launch this catalogue distribution retailing in India, Allen Solly will be the first Apparel retail brand that will be providing this catalogue retailing in India. 4. Forecast of Future expansion methods in the market Respondent is working in the successful Apparel brand ‘Allen Solly’ from Last 15 years and working for the expansion of the company and continuously obtaining success in the company expansion. Therefore respondent proves to be a person with excellent knowledge of market, trends and changes of the market. When respondent is questioned to suggest expansion strategies for apparel retail industry
that will be use by retailers in the coming years, he forecast that franchising, online retailing and non store formats will be the expansion method which will be use by retailers in future. “The upcoming era is the era of franchising however there are few expansion sectors in which apparel retail industry will definitely see a boom and these are, internet expansion and non store retailing like catalogue distribution” (Interview 1, 2011). Mintel also suggest that there will be tremendous increase in the online retailing and non store retailing format (Mintel, Clothing retail, 2010). According to the respondent, clothing retail companies will use the franchising as the primary strategy for their expansion and growth in the business. Summary Allen Solly have use the strategies of company own retail stores and franchisee stores both for the physical expansion of the company in the market. From the analysis it is clearly seen that the brand is benefited through the franchisee formats of their physical expansion. Franchising also helps them to increase the cash flow in the company and growth of the company. In terms of other formats of expansion, Allen Solly is using product diversification and online retailing. However they admit that product diversification help them to expansion as well to become ahead from competitors in the market by launching new products. They are generating 15% of the revenues through their online sales. Looking at the future expansion of the company, Allen Solly is still diversifying itself regularly to be ahead in the market. Now the company is planning to launch their catalogue retailing format in the next year which will help them to increase their customer base and sales revenues.
Data Analysis for Interview 2 The interview was held with one of the director and owner of the Head & Griffiths retail company. Head & Griffiths provides the bespoke clothing also known as bespoke clothing to the customers. This interview was face to face interview as interviewer and respondent office are in the same city so this interview was easy to manage as a face to face interview. A copy of transcript is attached in the appendix. The information in the table will give the identification of the company which has been interviewed. Name of the company Head & Griffiths Name of the Owners Owain Griffith and Domnic Shaw Business of the company Providing measure to made clothing Number of employees 5 Working locations Two: Leicester and Nottingham Website Address www.heada ndgriffiths.c o.uk
Head & Griffiths Company was started in the 2009 by Owain Griffith and Domnic Shaw. Owain Griffith was a student in De Montfort University and he started the business with the funding of Campus Enterprise Inc Programme of De Montfort University (headnandgriffiths.co.uk). ‘Under this programme De Montfort University promotes and funds the new and innovative business ideas of their students’ (dmu.ac.uk). Owain Griffith met Domnic Shaw whilst in the university and they both set up the business. After starting their business they have assembled a team of fitting consultant for their company. The issues discussed in the interview are divided into three categories: 1. Current business format and expansion Strategy 2. Effect of recession on current and future expansion plans 3. Forecast of Future expansion methods in the market
1. Current business format and expansion Strategy Head & Griffiths is based in Leicester and Nottingham, this company provides bespoke clothing. This company is known for the quality, service, bespoke designs and fitting of its clothing. The company was started in 2009 from one work location through Leicester. Head and Griffiths took measurements of the customers in UK than send these measurements to their suppliers in Bangkok and clothing is finished in Bangkok and then delivers to UK. By this mode of the production of clothing or outsourcing, they are getting benefited from the low cost production from Bangkok. In the last three years company has expanded into two working locations by starting their work from Nottingham. However from both of the working locations of the company none is the retail outlet store of the company. Company have conference rooms at their working locations and if any customer want to meet them, they invite the customers to their conference rooms and took measurement and deal with the customers. ‘Actually we are working from the two locations however we do not have any retail outlet or store, we invite the customer to there and take the measurements and do all other formalities‟ (Interview 2, 2011). Company have their online presence on the internet from the beginning and a major share of their business is coming from online sales (headnadgriffiths.co.uk). Head and Griffiths provide online support through their website, online enquiry form and also through the Skype online chat option. To make their online service more
customers friendly they have provided the self measurement guides on their website for the ease of the customers. The third and a very distinctive method they use for their expansion and sales is ‘Tailoring Tailor’. Under this format of retailing if any customer does not want to visit the retail store however want to have a face to face contact and all measurement services by the experts of retailer, in that case retailer come to the customer designated location. ‘Under this service we go to the customer decided locations and do all the formalities’ (Interview 2. 2011). This is a customize service for customers and a format of non store retailing. This is a very good step in the format of non store retailing and can lead to huge number of customer base because there is segment of the customer who is not able to visit stores due to their busy schedules. These customers can call the ‘travelling tailor’ to their designated location like work office and give measurement for their bespoke clothing. 2. Effect of recession on current and future expansion plans Economic crisis started in 2008 has ruined the expansion plans of many industries and lead to closure of many business and retailers. ‘Recession effect every sector of apparel industry. Many high street cloth retail shops are closing every day (Interview 2, 2011). ‘Head and Griffiths’ was planning to open their own retail outlet store to make their presence strong and brand image in the market. At that time recession had hit the world with economic downturn in every market therefore the company has abide their decision to open their own retail outlet unit. Currently the market is at the edge of high risk,
therefore ‘Head & Griffiths’ do not wish to invest in new store and trying to find out the new expansion method which needs low investment and also helps them to achieve their targets. Now they have decided to use franchising expansion strategy for their expansion because that will help them to establish their presence in the market simultaneously also give an instant cash in the form of franchising fee. „With the recession market become unstable and unpredictable therefore it is not the time of heavy investment in the new store and now we are planning for franchising‟ (Interview 2, 2011). The second strategy that Head & Griffith is planning for their expansion is the use of catalogue distribution or mail delivery retailing. Catalogue retailing is a popular retail format among the entire non store retailing formats in the UK. ‘Nowadays non store retailing is becoming most popular and most profitable strategy of retailers’ (Burns and Bryant, 2002, p466). Head & Griffiths are also expecting the same with this expansion method. They are expecting that use of this method in future will grow their customer base and sales. „This format is very popular in UK and will surely help me to boost up my sales and revenues and to expand my customer covering‟ (Interview 2, 2011) 3. Forecast of Future expansion methods in the market The respondent was a student of business faculty and now running business in retail industry from last three years therefore it is assume that he had a good knowledge of current and future trend of retail market. Therefore respondent is asked to suggest and give his
opinion for the forecast of trends of the expansion and growth strategies in coming years. Respondent suggest that in the future franchising, online retail and catalogue retailing will be the strategies used by retailers for their growth and expansion in coming years. However, respondent personally prefers the franchising strategy as the uttermost for the expansion of their business. ‘In UK the most popular type of growth strategy will be franchise and catalogue retailing and on line marketing. However my personal choice is franchising‟ (Interview 2, 2011). Summary Head & Griffiths does not have any retail outlet store however they are working from two different locations. They were planning to open their own retail store however they change their decision after the recession and now planning to open their retail store by giving their rights to franchisee. The reason behind this decision is the unstable conditions of the market and by franchising they will obtain a handsome amount of cash for their further business growth. The other format of retail which is generating their major share of the revenues is online retailing. ‘Head and Griffiths’ is present online since the company is launched in India. The second major strategy of non store retailing expansion they are using is ‘Travelling Tailor’; it is very distinctive expansion strategy and can help them to increase their customer base in future. For future ‘Head & Griffiths’ is planning to expand through catalogue distribution strategy, it will be very helpful for them to expand because it is the very popular and successful strategy in the UK market where they operate and run their business.
Secondary Data Analysis To achieve the better understanding of the expansion strategies of the apparel retailers secondary research is done through documents and websites of apparel retailers and then data gather through this research is analyse. ‘Levi Strauss an US based apparel retailer is using the franchising as their primary strategy for their physical growth in the market, this brand is expanding in so many countries across the world with the same strategy of franchising’ (Levi strauss.com). ‘Burberry an UK based retailer is also expanding by using the strategy of franchising expansion’ (Burberry.com). ‘Supermarkets like Sainburry, Tesco and ASDA also have came into apparel retail market by launching their clothing range alongside with their food retail markets, however these markets are expending through their own stores, they are not using franchising for their expansion’ (fashionbrand.co.uk) Out of all the companies that have been researched in the secondary research, some are using franchising expansion strategies for their physical expansion and supermarkets retail companies are expanding through their own stores however there is still one common strategy which is followed by all companies which is online apparel retailing. After the research and analysis it has been also found that the catalogue distribution as the non store retailing expansion strategy is becoming popular and either retailer’s are already using this strategy or either planning to launch their catalogue distribution in future. Through using the secondary data analysis, there would be a better understanding of knowledge gained through the primary data collected through questionnaires and interviews and this would further support the conclusion of the research.
Conclusion Apparel retail is present in the market from a long time however the nature of business of apparel retail has changed in the last century. There is lot of research has been done on the apparel industry and on the expansion strategies of the apparel retail companies. This research project has also research the apparel retail industry and the expansion strategies of the apparel retailers. The aim of the research is to analyse the current expansion strategies of apparel retailers by analysing the strategies of both big and small retailers of different countries. This research also tries to give a snapshot of the growth strategies which will be use by clothing retailers in the coming years. For this research firstly research findings, literature of previous researchers and books has been reviewed. By reviewing the literature it has been found that apparel industries are using different growth strategies for their expansion from 18th century. Some literature shows that brands like Levi Strauss are using licensing of their cloths from 18th century. Open new store for physical expansion in the market is done by using opening company own stores, strategic alliance with other companies, franchising, or merger at domestic and globally. Online expansion strategy is also use by retailers for their expansion in the no store retailing format. To find out the desired aim of the project, primary and secondary research has been done. For primary research two companies are interviewed, both the companies have completely different profile from each other. One company ‘Allen Solly’ is chosen from India by the aim of analysing the strategy of an apparel retail company from a developing country and developing retail sector, on the other hand second company ‘Head & Griffiths’ is chosen from UK by the
aim of analysing the expansion strategies of a small bespoke clothing retail company from developed country with very highly developed retail sector. In the primary research two questionnaires are designed for two companies and one face to face interview and one telephonic interview has been carried out. For the secondary research apparel retail companies websites, documents and authors statement are analysed with the current trend of the market. Whole project was done in less than two months therefore due to limited time only two interviews was carried out. Out of two interviews, one was telephonic to save the time and resources. Due to the limitation of any references, interview with a big apparel retail company of UK was not possible in the research as the researcher is the new in UK, researcher do not have any contact in the UK to arrange interviews in such a limited time and resources. After the interview and secondary research analysis is done on the data collected through the research. The data collected through interviews has been divided into categories of company current expansion strategies, effect of recession on the expansion and growth strategies, future plans of expansion of the company and suggestive forecast on the strategies will be use by retailers in coming years. By analysis it has been found that both the companies were planning to open their own retail outlets however due to the recession both companies has changed their decision to open their own retail outlet by their own investment. The effects of recession and benefits of expansion of business through the route of franchising strategy have forced the companies to use franchising as the primary and the main strategy for their physical expansion in the market. Recession has very badly affected the industry even lead to the closure of the business some retailers. Now retailers do not want to take a risk
with a huge investment in the business expansion through opening their own retail outlets. By analysis primary and secondary data it has been found that the use of internet and online presence of customers has been increased dramatically due to that all the apparel retailers are using online retailing for their online expansion. Some retailers thinks that the now market is recovering from the effect of recession and planning to expand through non store formats like catalogue distribution. In terms of forecast for the strategies will be use by apparel retailers in coming years, analysis has shown that franchising will be the expansion and growth strategy which will be use by the retailers for physical expansion from now to next decades and for the expansion in the non store format retailers will use catalogue distribution or mail delivery and online expansion as their primary strategy for their expansion.
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